Colombia recorded $14 billion in tax revenues in the first quarter of this year, up 19% on the same period last year, local media reported late on Tuesday. Colombia’s Finance Minister Mauricio Cardenas said the strong economy, higher than expected sales tax revenue and a new payroll tax reform have all contributed to the boost.
“We are a surplus of the goal, particularly in the case of VAT and we are meeting our collection goals [for 2014],” Cardenas said.
| “We are a surplus of the goal, particularly in the case of VAT and we are meeting our collection goals [for 2014].” |
Growing the formal economy
In 2008, 74.2 % of all Colombian labor force was considered informal, that is, not regulated or taxed by government. This left many without health or employment benefits – and outside the tax system.
MORE: Colombia passes progressive tax reform
To combat this, the tax reforms formulated in 2012 and introduced in January 2013 reduced the tax paid by companies for each employee (payroll tax) and replaced it with a tax on the profits they earn by making use of that labor.
MORE: Tax reform helping drive Colombia’s ‘promising’ economy: IMF
Colombia’s Portafolio magazine reported that the Colombian tax agency DIAN expected major tax revenues from this reform to arrive in April 2014.
Tax Evasion still a problem
Colombia’s tax revenues are still kept relatively low because tax evasion is a major problem costing the country millions each year, according to DIAN.
MORE: Colombia vows to combat tax evasion
Colombia signed a new pact with the United States last week to combat tax evasion. The announcement comes a week after the director of Colombia’s tax collection agency called for a 70% increase in the number of tax auditors in order to be able to effectively combat tax evasion.
MORE: Colombia tax agency says it’s 7000 auditors short
Sources
- Consumo de los hogares y la gestión impulsa el recaudo (Portafolio)
- Recaudo tributario en primer trimestre llega a $27,3 billones (El Espectador)